Buy Infinite Computer; target of Rs 190: Nirmal Bang

Nirmal Bang is bullish on Infinite Computer Solutions India and has recommended buy rating on the stock with a target of Rs 190 in its October 22, 2012 research report.

“Infinite Computer Solutions management has guided for revenues of USD265 million translating into Rs.1320 crore for FY’13. The EBITDA margins should be around 17-18 per cent signaling strong profit growth for the company going forward. The company has an excellent track record with regard to execution. Infinite has posted a CAGR of 27 per cent and 59 per cent in revenues and operating profits over FY’08-12 period. The company achieved a turnover of USD221 million dollar in FY’12 compared to the guided figure of USD200 million post the IPO.”

“The company has a dividend pay-out policy of 30 per cent. The company paid a dividend of Rs.8.5 per share on an EPS of Rs.28.05 in FY’12. On the back of strong revenue guidance backed by consistency in margins, we expect the company to distribute a dividend of atleast Rs.10 for FY’13 (translating into a dividend-yield of more than 6.5 per cent). The company has a strong Balance Sheet with net cash and cash equivalent totaling to Rs.180 crore, which translates into a cash of Rs.42.3 per share. This is equivalent to more than 28 per cent of the present price.”

“Infinite registered revenues of Rs.1055.8 crore in FY’12, registering an increase of 19.5 per cent y-o-y. The EBITDA for the year stood at Rs.195.4 crore compared to Rs.154.1 crore, an increase of 26.9 per cent y-o-y. The PAT for the year stood at Rs.120.7 crore against Rs.107.1 crore, an increase of 12.6 cent y-o-y. The EPS for the year stood at Rs.28.05. We expect Infinite to post a net profit of Rs.143 crore on revenues of Rs.1320 crore in FY’13E. This translates into an EPS of Rs.33.6. At the present price, the share is available at 4.5x FY’13E earnings of Rs.33.6. On the back of improved earnings, increase in promoter holding, dividend pay-out policy of 30 per cent, we expect the share price to touch Rs.190 over the next 6 to 9 months,” says Nirmal Bang research report. 

Shares held by Financial Institutions/Banks

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